Fear of a catastrophe - a permabear's complex

N

Neet

When I trade big positions, I'm a permabear.

Simply because of fear of a catastrophe in the stock market. This of course limits my entry opportunities by roughly HALF therefore cutting my potential gains severely. Especially during a bull market.

It also gives me peace of mind and that in my humble opinion is priceless.

You might ask yourself why would you limit yourself like that ? Good traders should be able to play the market both ways. Well, I've never seen a market spike up all of the sudden for an insane number of points. On the other hand, there has been many documented crashes in history. Frankly, I've never been caught in one of those awful moments. Honestly, when was the last time you woke up to a 10% upside move in the indexes.

Yes, market crashes are rare but when they happen no market stop order will save you. Especially when trading futures.

Imagine doing 10-20 or more contracts long and all of the sudden a catastrophe occurs. That would certainly wipe you out.

I'm not advocating this trading style. Simply confessing and looking for suggestions.

Any comments appreciated.
 
Welcome to the club. I have always been a bear as I am pessimistic by nature. There is only one long setup in my book and it only occurs near the open. Like you, I have the fear of a catastrophic event but since I am only trading one contract this is a bit unrealistic. The primary reason I mostly short is because up moves can be excrutiatingly slow. The market pops up then grinds its way higher. I like to catch those pops if I can but I cannot stand the slow grinds. The nice thing is that there are always opportunities to short even in an uptrend. I thought I could become neutral but it is no use. I am a bear.
 
IMO If you are caught in a major downside break, it's your own fault because someone always knows about the market crashes ahead of hand (crash of 87', 29', 9/11, etc), causing technical patterns to form. Follow the smart money since the markets will give you plenty of time to react before the floor dissolves.

I know that it's easy to say that in hindsight, but I'm sure there are a few people out there who got out before Nasdaq crashed in the tech bubble.

-show
 
Quote from Neet:

This must be some kind of joke.
More...

I think what he's telling you is that there was no technical reason to be playing the long side on 9/10. Think about it....we were trading at new lows for the week, month, and year that day. That's as much technical weakness as you will ever see.

OldTrader
 
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